HCI
HCI Group, Inc.
$174.95
Banks, Insurers & Asset Managers
85%
P/Tangible Book × ROE Quality
Moderate
·
Conviction
Undervalued
Trading 39.7% below fair value
You pay
$174.95
Bear
$195.06
Fair
$290.34
Bull
$290.34
Bear
$195.06
+11.5%
ROTCE 20.0% → 2.69x TBV
Fair
$290.34
+66.0%
ROTCE 25.0% → 4.00x TBV
Bull
$290.34
+66.0%
ROTCE 30.0% → 4.00x TBV
Key Value Driver
ROTCE (30.6%) vs. cost of equity (10.0%)
Implied Market Multiple
2.28x
Summary
Our base-case estimate uses P/Tangible Book × ROE Quality. We then blend that result with the average analyst price target of $225.00 from 14 analysts, using a 20% weight on analyst consensus. That produces an estimated intrinsic value of $290.34 per share.
Warnings
Traditional cash flow models don't work well for banks — lending activity distorts how much cash the business actually generates.
Common valuation shortcuts don't apply here — for banks, interest payments are a core business cost, not overhead.
Wall Street's average price target is $225.00 (from 14 analysts). Our estimate is 36% above the consensus -- consider that gap carefully.
Key Risks
- Book value quality matters as much as level — check loan loss reserves
- Interest rate sensitivity creates non-linear earnings surprises
- Insurance reserving is actuarial, not financial — errors emerge slowly